China Shrank

New York Times reported that World Bank has been computing GPD, based on PPP, with 1980’s prices all the time. After they have switched to current prices, China’s GPD shrank to mere US$6 trillions, instead of US$10 trillions.

China Daily picked up the same story on December 18th, but the numbers are slightly different.

This is comical. PPP based GPD, said the article, is preferred by economists. World Bank is among the most prestigeous economist society. It is a collosal blunder for World Bank to have used a 25-year-old price basket for GPD computation. I don’t really quite understand how can this happens, governments, China included, publish CPI data every year.

Does this mean the USA has lost their ground to pressure China to appreciate RMB faster?

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